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The Connected ConversationVolume 1 / Issue 2 / March 2015

Connected Car: Where are We Headed?pg. 3

Connected CarFun Factspg. 8

News Flashpg. 2

Are We Building a Bubble in IoT?pg. 7

IoT Security, a Legislative Issue? The Jury’s Still Outpg. 9

Connected Car Survey Questions pg. 11

110 E. Houston St., 7th Floor, San Antonio, TX 78205 / 210.401.0051 / http://www.Jbrehm.com


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News Flash: Year-end Numbers &Our Results

We’ve Released Our ResultsAs usual, we have been crunching industry numbers for the past few months, and have come to the latest industry view. Looks like the U.S. is up to 45,398,000 M2M and IoT connections. The leading carrier for M2M remains AT&T, while automotive and telematics continue to lead other vertical markets in M2M adoption. For more information, and to see how to put our research to work for you, contact us [email protected] for a free consultation today.

Apple Car?Lots of rumor lately that Apple will enter the car business —as an automotive OEM, no less. It seems investors have asked Tim Cook to purchase Tesla. A request he says he is actively avoiding.

No doubt Silicon Valley would love to create a seamless connected experience —or that today’s connected vehicle is the last frontier (the one place they haven’t reached into our lives, yet)—we think a better approach would be to collaborate with the automakers’ burgeoning offices in the Valley and contribute their UX expertise to the carmakers growing software and services work.

What does the future hold for 2lemetry?Tech Crunch recently reported that Amazon had acquired M2M platform provider 2lemetry for an undisclosed sum. Turns out, the amount is not the only thing still undisclosed. In fact, neither Ama-zon, nor 2lemetry have issued any public announcement addressing the deal, even a week after close —though we have found that 2lemetry tools are already available for users of Amazon Web Services. Watch this space for updates.

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The Connected Car: Where are We Headed?

The connected car has become a buzz word within the Internet of Things (IoT) industry as more devices connect us to make our lives more efficient, effective, and improve our driving experience. By Martha Vazquez

GM OnStar pioneered the industry 19 years ago, paving the way for automotive OEMs to provide security, safety, and peace of mind for drivers. Because of the expansion of growth within the IoT industry today, the connected car has evolved beyond offering safety and security, to offer a breadth of other rich services.

Automaker OEMs are taking advantage of this opportunity by developing new technologies to enhance user experience. Although GM OnStar began the connected car experience, they are not the only company to offer these services. Other car makers, such as Audi and BMW, have also jumped on the band wagon to grow their customer base, boost brand name, and improve the quality and engineering of their vehicles. Not only do we see that Automotive OEMs are enhancing their services to remain competitive, but from a quality enhancement standpoint, they are improving the engineering and

design of their vehicles.

There have been some conflicting views on how we define the connected car. Often, the “connected car” term refers to a vehicle that requires some type of wireless connectivity, whether it’s tethered or embedded. At JBA, however, we refer to the connected car specifically as a vehicle that is connected through an embedded solution that enables users to manage a variety of services through a single platform.

With more than 339 million vehicles on the road in the U.S., and less than 30% of passenger and fleet vehicles connected today, more companies are expected to enter the market and take advantage of the increasing opportunities. Because of this, we expect to see that by 2020, more than 90% of new vehicles sold will be connected as more companies monetize the connected car business model.

By utilizing a single embedded platform, automotive OEMs are growing new revenue streams and offering a broad range of enhanced services. Additionally, big data analytics is being extracted from vehicles to offer enriched information for the driver and OEMs as the industry moves from 3G to 4G LTE. Connected vehicle services include: safety and security, proactive vehicle maintenance, and infotainment and navigation services.

Safety and security technologies include driver services



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during extreme emergency situations regarding inclement weather and hazardous road conditions, emergency-call functions, stolen vehicle tracking, and crash alert notifications. Infotainment systems enable vehicles to be used as mobile offices by sending emails, connecting to the Internet or instant messaging. Drivers and passengers have access to stream music and videos, while those searching for the nearest Starbucks or restaurant can use infotainment systems to find these points of interest. Navigation services help drivers find their destination points, available parking information, and provide efficient travel time via reroutes and real-time traffic assistance.

Vehicle diagnostics and analytics are some of the tools automotive OEMs use to differentiate themselves from their competitors. Drivers can use these services to receive diagnostic reports on their vehicle, along with maintenance notifications, and schedule routine maintenance reminders. Proactive maintenance notifications help reduce operating costs and improve efficiency. For instance, with OnStar a driver can receive the diagnostics of the vehicle, while the automotive OEM sends the information to the dealership of choice, wherein the dealer is then able to analyze the information to schedule an appointment for service. This not only benefits the driver, but the OEM as well. Automotive OEMs now have the opportunity to deal with customers directly, which can help build brand loyalty and growth. Furthermore, dealers have the opportunity to enhance customer relationships by offering convenient and efficient vehicle scheduling services and more. For customer’s, there is now an incentive to do business with a dealer.

Operators also have a number of opportunities within the connected vehicle market in terms of revenue and customer growth. Mobile operators are taking a pivotal role in helping automotive OEMs develop and enhance their connected car platforms and services.

By partnering with mobile operators like AT&T, automotive OEM’s are able to deliver a broader array of services. For example, OnStar, customers can get 3 GB of data with a 3 month free trial, but can also purchase a plan from OnStar or AT&T. Customers have the ability to attach the car to a data plan or add it as a mobile share plan on their account. Flexibility is built into the Wi-Fi and customers can take advantage of these services by using it on a day-to-day basis if they choose to enable OnStar and AT&T in order to expand their customer base. Adding flexibility through enhanced technologies will enable better relationships between the customer and the manufacture.

Embedded 4G LTE technology gives customers additional convenience and value-added services. With these data services, automotive OEMs can utilize their



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capabilities to offer insightful information on vehicle diagnostics. In fact at CES last year, OnStar announced OnStar Driver Assurance, an advanced diagnostics feature that can monitor certain engine parts, such as the battery, starter motor, or fuel system over time. The sensors will track how the parts are performing, then an algorithm is used to access the motor’s conditions. Using predictive analytics, OnStar can determine when a future issue may occur within the vehicle, and then send a notification to the user. With these advanced diagnostics, third-party dealers will be able to prioritize their maintenance scheduling for customers.

Application Programming Interfaces or APIs provide a unique opportunity for OEMs, enabling them to improve the customer experience by meeting expectations through offering innovative connected services. APIs allow automotive OEMs to provide access to information of the vehicle. This creates an opportunity for developers to integrate data that is gathered from the vehicle, analyze it in real time, then deliver it to the user. APIs can be used for remote start services, parking space availability, usage based insurance and so forth. Additionally, drivers can connect to merchants based on where they are headed. With a 4G connection, drivers can use a cloud based service called AtYourService to find a local merchants like Dunkin’ Doughnuts or Starbucks.

Others, like Audi and BMW, are also leading the competition in offering advanced new technologies within the connected car industry. Audi offers Audi Connect, which enhances user experience through voice recognition, navigation, as well as streaming and other services. Audi also offers its drivers a complimentary six month trial subscription, versus OnStar’s three month trial.

Currently, BMW is focusing on its ConnectedDrive, as Accenture recently completed the design of their backend platform. BMW realizes the need for scalability and

management capabilities as more users demand flexible apps to add to their services. With its new “Business Integration Platform”, BMW allows users to add new services tailored to their service needs, and by offering these integrated services, BMW creates a closer relationship with its customers, as well as a new sales channel.

While the opportunities for the connected vehicle industry are immense in terms of revenue and customer growth, automakers will have to address security and

privacy issues as products continue to develop. Cars today can be hacked—it’s been proven that if a car has a software operating system, vulnerabilities exist. In fact, Senator Edward Markey (D-MA) recently released a study warning automakers about the vulnerabilities existing within the connected car market, and called upon them to work on preventing car hacks. Even now, there are still holes in vehicle security, particularly concerning the implementation of appropriate measures in order to protect drivers from hacked vehicles or stolen personal consumer data.

OnStar realizes security is an issue that needs to be addressed by the industry. There are a lot of “things” being connected beyond automotive, which is why it has an ongoing cybersecurity effort to understand the type of risks that are present and how to reduce them.

As for privacy issues, there is progress being made to protect consumer personal data. Automaker OEMs are taking this seriously and coming together to create a set of privacy and data security principles that will help regulate how consumer data is used and shared. OnStar tries to maintain as much transparency as possible regarding the

Safety and Security

• Stolen Vehicle Tracking• Roadside Assistance• Crash Notifications• Emergency Services

• Mobile office, e- mails, internet• Streaming music and videos• Geolocation of points of interest such as restaurants

• GPS, Directions, Reroutes• Traffic Information• Parking Garage Assistance

• Maintenence Notifications• Information about Vehicle Notifications• Service Scheduling and Updates

Infotainment NavigationServices

VehicleDiagnostics



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collection and sharing of customer data. Customers have the option to participate or not data collection services, but too many times the customer is unaware of what they are agreeing to. We think automakers must implement the necessary security measures to protect consumer information against loss or theft.

According to Tim Nixon, CTO of Global Connected Consumer for GM Onstar, “OnStar recognizes that we are stewards of the data, and made a promise to our

customers. This is something we don’t take lightly. It’s not just about the security of the data, but that we are protecting the customers’ privacy.” OnStar evaluates where the customer information is residing and how long it resides there. There are lots of things they are doing to protect the data once it leaves the car.

With technology advancing, 4G LTE will enable new capabilities—providing flexible options for auto OEMs with services like over-the-air updates, as application deliveries will become more efficient. Additionally dealers, will become an essential part of the value chain as customers turn to them for vehicle repairs and other services. We see this as an exciting area for dealers to build on relationships with customers to create long term relationships which will benefit all parties involved including the OEM.

Automaker OEMs are utilizing APIs that give vehicles the ability to function in a cloud environment as a way to offer more apps to the customer. Because of this, customers are now able to work with third-party providers like insurance companies as a means to gain more insight on their driving capabilities which can then be used to collect insurance quotes. With these type of advancements, we believe that automaker OEMs need to seize this opportunity and develop better monetizing

tools to generate additional revenue. With the right partnerships and strategy, the connected car will certainly grow exponentially in terms of revenue and connections.

Finally, we believe OEMs have a real opportunity to disrupt the market by offering a single, broad platform solution as opposed to a single-use platform solution. How will those who have yet to adapt differentiate themselves in the future? How important will it be to offer not just one mobile operator service, but many others to the customer over the next decade? Competition

will always create a benefit to the customer by offering flexible hardware options and pricing, but the key to differentiation will be when an automotive OEM can create a more ubiquitous platform to provide to its customers.

However, will this type of flexibility enable the automotive industry to prevail over encroachment by Sillicon Valley, or will Californian tech giants pull the rug out from beneath them?



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Are We Buildinga Bubble in IoT?

Over the past 90 days, I have seen no fewer than five (5) lists of the “top” companies in M2M and IoT. Most of these lists have absolutely no foundation in reality.By James Brehm

On one, a company was listed that had been acquired in July 2014 and has been integrated into the acquirer. They cease to exist, but someone thinks they are one of the IoT Influencers of tomorrow.

On another list, there is a company who was placed in the top 10 (yes, they were so bold as to actually RANK the companies) who has NO REVENUE. How do I know that they have no revenue? Because I spent the last

few days in meetings with their executive team.

When I talked to their CEO about it, he said “James, we’ll take it, but that’s why we talk to you. Most of these analysts don’t have a clue as to what is really going on, they buy into the hype. But are we going to turn down the free press? Heck no!”

At Mobile World Congress in Barcelona a few weeks ago, there was this new thing everyone was talking about — the Internet of Things. It was buzzing at every booth.

Even the conference staff got into the mix and gave away the Best Mobile Innovation for IoT award to SIM management and provisioning expert, Jasper. They do a helluva job at allowing someone to activate cellular devices and view their cellular connected “things” through an online management portal, but is this really new? Hasn’t Jasper been doing this for years?

And on that same topic, I can’t begin to tell you the number of times I had someone ask me about their potential IPO. That scares me. Any time somebody wants to IPO with a $2B valuation and less than $100M in revenues (my estimate), it scares me. Jasper isn’t a true SaaS company, yet is looking for a SaaS valuation.

And my talk of overvaluation doesn’t even touch on the acquisitions that have happened over the past few months. I’ve got a blog on it: Wireless Logic Acquired by CVC Capital.

Platforms: I can’t go a day without someone calling me or emailing me for help with their Application Enablement

http://www.jbrehm.com/blog/2015/2/10/wireless-logic-acquired-by-cvc-capital

http://www.jbrehm.com/blog/2015/2/10/wireless-logic-acquired-by-cvc-capital



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Platform. 2lemetry was acquired last week, and I haven’t found a single person to share insight on the valuation, but that leaves at least 63 companies on my list of “Who Has a Platform”.

Over the next couple of months, we’re going to do an analysis of these platforms, from Ayla to Zoho. So, if you want to include your platform in our review, please shoot us an email. We’d love to include you. [email protected].

We’ve got a matrix constructed for evaluation, but if you have some criteria for inclusion, we’d like your feedback on that too.

Anyway, with poor lists, overvalued companies, too many platforms, and way too much Private Equity money looking for a home, the market looks like a balloon straining against overinflation. Let’s hope it doesn’t pop.

Connected CarFun Facts

First In-Vehicle Telephone1n 1910, Lars Magnus Ericsson, founder of Ericsson, developed the first in-vehicle phone. Using poles to “hook” onto roadside telephone wires, Ericsson and his wife were able to call their friends as they traveled. Source: Wired.

The Beginning of True Mobile CommunicationFuture AT&T CEO H.I. Romnes and his teammates, Alton Dickieson and D. Mitchell from Bell Labs, spent more than a decade developing a dashboard-connected phone. The first mobile telephone call was made from a truck, July 17th, 1946. Source: AT&T.

First Connected CarGM produced the first fully connected car in 1996 when it released its’ embedded telematics system, OnStar, paving the way for in-vehicle connectivity and safety services. Source: GM OnStar.

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http://www.wired.com/2013/09/ericsson-apple-car-phon/

http://www.corp.att.com/attlabs/reputation/timeline/46mobile.html

http://www.gm.com/vision/design_technology/onstar_safe_connected.html



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IoT Security, a Legislative Issue? The Jury’s Still Out. Lawmakers Finally Pushing for Internet of Things (IoT) Security By Martha Vazquez

In 2011, President Obama issued the Cybersecurity Legislative Proposal, calling on Congress to take immediate action and give private and government sectors the right tools to thwart cyberattacks. President Obama also issued the International Strategy for Cyberspace to create awareness among other nations that cybersecurity is a priority for the United States. Changes are ongoing in the legislature, even as we experience more attacks on major companies such as Sony and Anthem. And now, lawmakers are pushing for policy changes to address the Internet of Things (IoT) industry.

As more “things” are becoming connected, lawmakers are desperately seeking ways to create laws that will foster innovation while protecting consumer personal data from attacks. IoT security is becoming such a big issue that on February 11, 2015, a group of lawmakers pushed for a hearing before the Senate Commerce and Transportation Committee called “The Connected World: Examining the Internet of Things,” in an attempt to understand the risks.

Today, connected devices give us the convenience and flexibility to become more productive, especially for personal health reasons. Companies are benefiting from IoT as well thanks to increased efficiencies, and the ability to offer a variety of new service options, products, and

flexible business models. It is broadly agreed that the economic growth potential of the IoT could, in fact, revive the global economy. The IoT will create positive effects and help revolutionize how sectors, such as manufacturing, healthcare, transportation and utilities, are currently conducting business.

As lawmakers acknowledge the benefits of the IoT space, they also realize the possibility of a hack to home appliances and the danger of stolen data from a connected car or wearable device. Because of this, new fears have emerged around consumer data privacy and security. Consumers should also be aware of how their data is being used or if their behavior is being tracked to help advertisers. The increasing amount of connected devices poses new challenges, especially since this technology relies on wireless connectivity. With the increasing concern over IoT security, lawmakers are under pressure now, more than ever, to make sure consumers and systems are protected.

Lawmakers are struggling with ways to promote innovation while also addressing privacy and security challenges. With billions of devices already in the market today across a variety of different business sectors, arriving at one standard policy will be difficult. As data continues to move across a number of platforms and devices, a standard policy may be difficult to implement, but by applying some foundation, will help promote data security as new technological developments come into play.

Lawmakers should promote “security by design” for developers, (meaning that security should be designed



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within the product from the beginning) and adopt policies to limit data collection. Providing consumers with choices about how their information is being used should also be addressed. Enforcing encryption technologies can undoubtedly help protect consumers by securing data that is being used in real time. Another key to security resides in education and awareness of how and when the consumer data is being utilized by third party vendors. Understanding what the information will be used for will help consumers be more selective or cautious with the type of information that they share. Overall, new technology will continue to be disruptive and evolve over time, forcing lawmakers to keep pace with all the changes occurring today and in the future.

Congress: Tread CarefullyBy Sara Brown

Among the tech community, IoT players have a rather complex relationship with the regulatory and legislative community. While they would prefer to avoid any hindrance to innovation, they are also direct beneficiaries of government regulation across multiple industries. In fact, many of the most broadly adopted and successful IoT applications were designed specifically to address regulatory compliance in areas like energy, transportation, and the environment. Conversely, some very useful applications have found themselves bound by regulations that have proven to be a burden to growth—healthcare applications, in particular, come to mind.

In the past month, both houses of Congress have followed in the footsteps of the Federal Trade Commission (FTC), launching investigations into this growing technology

revolution and its implications on cybersecurity and consumer privacy.

In January, the FTC issued a report urging IoT developers to build security protocols and privacy protections into connected devices and related services from the very start. Since then, a newly established Congressional Caucus on IoT has expressed concern about cybersecurity. Simultaneously, the Senate Commerce Committee held a hearing on IoT, resulting in a proposed resolution recognizing the “promise connected technologies hold to empower consumers, foster future economic growth, and improve our collective social well-being,” and urging regulatory restraint.

With the alphabet soup of government regulatory bodies (DOE, DOT, EPA, FTC, FCC, OSHA . . .) reaching into the IoT already, it is my hope than any intervention on the part of Congress results in a more streamlined approach to protecting the integrity of networks and the data that holds such promise.

Still, I’m wary about government intervention into an issue already top of mind among vendors to the IoT world. Following are three potential effects of government action:

1. There is a delicate balance between security and usability. Too many security hurdles can kill an



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James Brehm & Associates (JBA) is a consulting and marketing intelligence firm that provides project-based and retained strategic advisory services to technology companies worldwide. With a firm focus on the Internet of Things (IoT), Machine-to-Machine (M2M), and Big Data Analytics, JBA provides actionable insight and direction to a wide range of organizations including Communication Service Providers, Hardware Manufacturers, Software Vendors, OEMs, Private Equity, and Venture Capital Firms. Through projects on market size and share, competitive intelligence, product development, go-to-market strategy, and client-specific consulting services, we help companies reach their maximum potential.

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IoT application before it gets off the ground, just as a cyberattack can kill a not-so-secure application that has already launched.

2. With the pace of innovation in the tech space, establishing a hard line security standard could result in an arbitrary check point that actually halts security innovation in its tracks—effectively creating a “good enough” standard which is, by the time it is implemented, months behind the technology both of the industry and, more dangerously, of potential attackers.

3. With government action, there is a danger that large companies yield more influence than the innovative entrepreneurs and small companies on which the Internet of Things was built.

There is no doubt among either industry players or governments the world over, that cybersecurity is essential. Still, any government action must allow and encourage market experts to find optimal solutions capable of addressing the security issues of this rapidly changing landscape.

If you’d like to continue to receive The Connected Conversation, you can email our Content Czar, Joyce Deuley, at [email protected] or call (210) 401-0051.

Do you own a connected car? Yes No More than One

If yes, which connected car service do you use most often? Infotainment Safety/Maintenance Features Navigation Concierge Services

If no, which service is most likely to pursuade you to buy a connected car? Infotainment Navigation Concierge Services Safety/Maintenance Features

Please submit survey answers to [email protected]

Connected Car Survey

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